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Shopify Plunges 13% in a Month: Buy, Sell or Hold the Stock?
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Key Takeaways
SHOP shares fell 12.6% in a month as slowing growth expectations and AI investment costs weighed.
Shopify sees Q3 revenue growth in the low-30% range after Q2 revenues rose 34% year over year.
SHOP Payments penetration reached 68% of GMV, while AI-driven traffic and orders tripled in Q2.
Shopify (SHOP - Free Report) shares have declined 12.6% in a month in contrast to the broader Zacks Computer and Technology sector’s decline of 1.1%. The underperformance can be attributed to slowing forward growth expectations and concerns about the cost of sustaining its AI-led expansion. However, Shopify’s prospects are expected to benefit from AI-driven commerce, strong merchant engagement, rising payments penetration, an expanding enterprise clientele and an international footprint. So, does the pullback offer a buying opportunity for investors? Let’s find out.
SHOP’s Q3 Guidance Implies Deceleration
Shopify’s second-quarter 2026 revenues increased 34% year over year to $3.58 billion and Gross Merchandise Volume (GMV) increased 32% to $115.6 billion. However, the company expects third-quarter 2026 revenue growth in the low-30% range, implying some moderation from the second quarter. Gross profit growth is expected to be slower at a mid-to-high-20% rate.
Merchant Solutions is growing substantially faster than Subscription Solutions. In the second quarter of 2026, Merchant Solutions revenues increased 37%, compared with 22% growth in Subscription Solutions. Shopify Payments, the largest component of Merchant Solutions, carries lower gross margins because of third-party processing costs. Shopify acknowledges that a continued revenue mix shift toward Merchant Solutions could reduce its overall gross-margin percentage.
Shopify is investing aggressively in agentic commerce and Sidekick, but AI commerce remains small relative to overall GMV. The company is currently monetizing agentic transactions through its existing economics rather than charging separate AI-related fees. Therefore, investors expecting faster direct monetization from Shopify's AI investments may need to wait for higher AI-driven GMV to materially influence revenues.
Shopify is suffering from stiff competition from the likes of Amazon (AMZN - Free Report) , Wix.com (WIX - Free Report) and Commerce.com (CMRC - Free Report) . Amazon’s services, such as Buy with Prime, Amazon Multi-Channel Fulfillment (MCF) and Amazon Pay, enable merchants to sell both on and off Amazon while leveraging its fulfillment network and checkout technology. Wix competes with Shopify by providing an all-in-one platform that combines website creation, online stores, payments, booking, marketing and AI-powered business tools. Commerce.com offers cloud-based software for building online stores, managing product catalogs, processing payments, supporting omnichannel selling and serving both B2C and B2B merchants.
In terms of share price performance, Commerce.com and Wix.com have returned 73.8% and 12.1%, respectively, while Amazon has dropped 4.9%.
SHOP Stock’s Price Performance
Image Source: Zacks Investment Research
SHOP Shares Are Overvalued
Shopify is significantly overvalued, as suggested by a Value Score of F.
In terms of the forward 12-month price/sales (P/S), SHOP is currently trading at 9.4X compared with the broader sector’s 5.98X. Shopify shares are pricey compared with Amazon, Wix.com and Commerce.com. Shares of Amazon, Wix.com and Commerce.com are trading at P/S multiples of 2.93, 1.98 and 0.88, respectively.
SHOP Stock’s Valuation
Image Source: Zacks Investment Research
SHOP to Ride on AI Push & Payments Penetration
Shopify's Catalog, Universal Commerce Protocol and Sidekick are strengthening its exposure to AI-driven shopping. AI-driven traffic and orders to Shopify stores tripled year over year in the second quarter of 2026, while new-buyer order rates from AI channels were roughly twice those of other channels. The company also highlights more than one billion products in Shopify Catalog, giving AI agents a large structured product database for commerce discovery.
Sidekick is also seeing accelerating adoption. Merchants conducted nearly 34 million Sidekick conversations in the second quarter of 2026 and created 36,000 custom apps, up from 12,000 in the first quarter of 2026. Sidekick-assisted onboarding increased the number of new merchants reaching five orders within 15 days by about 8%, potentially supporting merchant success and retention over time.
Shopify Payments remains a major growth engine. Payments penetration reached 68% of GMV in the second quarter of 2026 from 64% a year earlier, helping gross payments volume reach $78.1 billion. Shopify has expanded Payments to 40 countries, while penetration in Europe increased by more than 350 basis points year over year. Further geographic expansion and adoption of local payment methods provide additional room for Merchant Solutions growth.
Meanwhile, Shopify is moving beyond smaller online merchants toward large brands and complex retailers. The company said the $25-million-plus merchant cohort was its fastest-growing merchant-size segment, while existing shops moving into the $2-million-to-$25-million group continued to provide substantial incremental GMV. Shopify Plus, B2B, POS and unified commerce capabilities increase the platform's addressable market and deepen relationships with larger customers.
SHOP’s Earnings Estimates Revisions Are Steady
The Zacks Consensus Estimate for SHOP’s third-quarter earnings is currently pegged at 44 cents per share, unchanged over the past 30 days and indicating year-over-year growth of 29.41%.
The Zacks Consensus Estimate for SHOP’s 2026 earnings is currently pegged at $1.89 per share, unchanged over the past 30 days and indicating year-over-year growth of 61.54%.
Conclusion
Shopify’s long-term growth prospects remain supported by rising payments penetration, strong merchant engagement, enterprise adoption and expanding AI-driven commerce capabilities. However, slowing near-term growth, a revenue mix shift toward lower-margin Merchant Solutions, intense competition and limited direct monetization from AI initiatives remain concerns. Moreover, SHOP’s premium valuation leaves limited room for execution missteps despite the recent share-price pullback. With earnings estimates remaining steady, investors may prefer to wait for a more attractive entry point. Therefore, holding Shopify stock appears appropriate for now.
View the Zacks #1 Rank List
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Shopify Plunges 13% in a Month: Buy, Sell or Hold the Stock?
Key Takeaways
Shopify (SHOP - Free Report) shares have declined 12.6% in a month in contrast to the broader Zacks Computer and Technology sector’s decline of 1.1%. The underperformance can be attributed to slowing forward growth expectations and concerns about the cost of sustaining its AI-led expansion. However, Shopify’s prospects are expected to benefit from AI-driven commerce, strong merchant engagement, rising payments penetration, an expanding enterprise clientele and an international footprint. So, does the pullback offer a buying opportunity for investors? Let’s find out.
SHOP’s Q3 Guidance Implies Deceleration
Shopify’s second-quarter 2026 revenues increased 34% year over year to $3.58 billion and Gross Merchandise Volume (GMV) increased 32% to $115.6 billion. However, the company expects third-quarter 2026 revenue growth in the low-30% range, implying some moderation from the second quarter. Gross profit growth is expected to be slower at a mid-to-high-20% rate.
Merchant Solutions is growing substantially faster than Subscription Solutions. In the second quarter of 2026, Merchant Solutions revenues increased 37%, compared with 22% growth in Subscription Solutions. Shopify Payments, the largest component of Merchant Solutions, carries lower gross margins because of third-party processing costs. Shopify acknowledges that a continued revenue mix shift toward Merchant Solutions could reduce its overall gross-margin percentage.
Shopify is investing aggressively in agentic commerce and Sidekick, but AI commerce remains small relative to overall GMV. The company is currently monetizing agentic transactions through its existing economics rather than charging separate AI-related fees. Therefore, investors expecting faster direct monetization from Shopify's AI investments may need to wait for higher AI-driven GMV to materially influence revenues.
Shopify is suffering from stiff competition from the likes of Amazon (AMZN - Free Report) , Wix.com (WIX - Free Report) and Commerce.com (CMRC - Free Report) . Amazon’s services, such as Buy with Prime, Amazon Multi-Channel Fulfillment (MCF) and Amazon Pay, enable merchants to sell both on and off Amazon while leveraging its fulfillment network and checkout technology. Wix competes with Shopify by providing an all-in-one platform that combines website creation, online stores, payments, booking, marketing and AI-powered business tools. Commerce.com offers cloud-based software for building online stores, managing product catalogs, processing payments, supporting omnichannel selling and serving both B2C and B2B merchants.
In terms of share price performance, Commerce.com and Wix.com have returned 73.8% and 12.1%, respectively, while Amazon has dropped 4.9%.
SHOP Stock’s Price Performance
Image Source: Zacks Investment Research
SHOP Shares Are Overvalued
Shopify is significantly overvalued, as suggested by a Value Score of F.
In terms of the forward 12-month price/sales (P/S), SHOP is currently trading at 9.4X compared with the broader sector’s 5.98X. Shopify shares are pricey compared with Amazon, Wix.com and Commerce.com. Shares of Amazon, Wix.com and Commerce.com are trading at P/S multiples of 2.93, 1.98 and 0.88, respectively.
SHOP Stock’s Valuation
Image Source: Zacks Investment Research
SHOP to Ride on AI Push & Payments Penetration
Shopify's Catalog, Universal Commerce Protocol and Sidekick are strengthening its exposure to AI-driven shopping. AI-driven traffic and orders to Shopify stores tripled year over year in the second quarter of 2026, while new-buyer order rates from AI channels were roughly twice those of other channels. The company also highlights more than one billion products in Shopify Catalog, giving AI agents a large structured product database for commerce discovery.
Sidekick is also seeing accelerating adoption. Merchants conducted nearly 34 million Sidekick conversations in the second quarter of 2026 and created 36,000 custom apps, up from 12,000 in the first quarter of 2026. Sidekick-assisted onboarding increased the number of new merchants reaching five orders within 15 days by about 8%, potentially supporting merchant success and retention over time.
Shopify Payments remains a major growth engine. Payments penetration reached 68% of GMV in the second quarter of 2026 from 64% a year earlier, helping gross payments volume reach $78.1 billion. Shopify has expanded Payments to 40 countries, while penetration in Europe increased by more than 350 basis points year over year. Further geographic expansion and adoption of local payment methods provide additional room for Merchant Solutions growth.
Meanwhile, Shopify is moving beyond smaller online merchants toward large brands and complex retailers. The company said the $25-million-plus merchant cohort was its fastest-growing merchant-size segment, while existing shops moving into the $2-million-to-$25-million group continued to provide substantial incremental GMV. Shopify Plus, B2B, POS and unified commerce capabilities increase the platform's addressable market and deepen relationships with larger customers.
SHOP’s Earnings Estimates Revisions Are Steady
The Zacks Consensus Estimate for SHOP’s third-quarter earnings is currently pegged at 44 cents per share, unchanged over the past 30 days and indicating year-over-year growth of 29.41%.
Shopify Inc. Price and Consensus
Shopify Inc. price-consensus-chart | Shopify Inc. Quote
The Zacks Consensus Estimate for SHOP’s 2026 earnings is currently pegged at $1.89 per share, unchanged over the past 30 days and indicating year-over-year growth of 61.54%.
Conclusion
Shopify’s long-term growth prospects remain supported by rising payments penetration, strong merchant engagement, enterprise adoption and expanding AI-driven commerce capabilities. However, slowing near-term growth, a revenue mix shift toward lower-margin Merchant Solutions, intense competition and limited direct monetization from AI initiatives remain concerns. Moreover, SHOP’s premium valuation leaves limited room for execution missteps despite the recent share-price pullback. With earnings estimates remaining steady, investors may prefer to wait for a more attractive entry point. Therefore, holding Shopify stock appears appropriate for now.
Shopify currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.